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. Last Updated: 07/27/2016

Litvinenko Dispute Hits Stocks

Stocks fell Wednesday after Russia said it would not extradite a former FSB agent and murder suspect to Britain, raising concern that increasing political tensions will discourage foreign investment.

Shares of Sberbank, Unified Energy Systems and TNK-BP led the decline. The equity market has also been hurt as initial public offerings drained investors' cash, traders said Wednesday.

The ruble-denominated MICEX index tumbled 2.9 percent to 1597.42, the biggest move among equity markets included in global benchmarks. All but one of the 30 stocks in the index retreated. The dollar-based RTS index decreased 2.4 percent to 1815.64.

"International investors are being forced to put cash aside for new stock issues,'' said Julian Rimmer, head of sales trading at UralSib in London.

No. 2 bank VTB raised $8 billion this month in the biggest IPO worldwide so far this year. The stock fell 1.4 percent to $11.31 in London. Shares of VTB are scheduled to start trading in Russia on May 25.

Shares of market leader Sberbank fell 3.6 percent to 93,248 rubles on MICEX, the lowest close since April 4. Power utility UES dropped 3.3 percent to 32.894 rubles.

"It looks like another round of negative news flow between Russia and Europe," said James Beadle, a portfolio manager at Pilgrim Asset Management. "I was hoping that we would begin to see a stabilization of relationships."